PHL trims debt; still higher than 2020 level

WHILE the national government’s total outstanding debt by the end of December 2021 shrank to P11.73 trillion from previous month’s level, it was still higher than the debt stock as of end-2020.

The Bureau of the Treasury reported on Tuesday that the debt stock dipped by 1.7 percent or P203.28 billion from P11.93 trillion as of end-November 2021. The decline was caused by net redemption of government securities.

While the December debt figure fell within the government’s projected level for the year, it was still a 19.7-percent surge from the P9.795 trillion the state incurred at the end of December 2020.

However, the Treasury said December’s number is lower than the 26.7-percent year-on-year growth in outstanding debt in the previous year “due to better fiscal performance and lower financing requirements.”

The country’s debt-to-GDP (gross domestic product) ratio stood at 60.5 percent, rising from 54.6 percent in the previous year and slightly higher than the 59.1 percent projected by the government for 2021. The internationally-accepted threshold for emerging markets, including the Philippines, is at 60 percent.

The Treasury department maintains the ratio was “still within the accepted sustainable threshold as the economy continues to recover from the effects of the pandemic.”

Of the total debt stock, majority or 69.7 percent, was sourced locally while the rest were owed to foreign lenders.

Domestic debt as of end-December 2021 slipped to P8.17 trillion, lower by 3.2 percent from P8.44 trillion in the previous month on the back of the repayment of the P540-billion provisional advance from the Bangko Sentral ng Pilipinas. That amount outpaced the net issuance of government securities.

Year-on-year, domestic debt jumped 22 percent from P6.69 trillion in 2020.

The Treasury said the domestic borrowing program favored domestic issuance as such mitigated foreign-exchange risks and supports local capital market development.

Meanwhile, a weak peso led to external debt reaching P3.56 trillion in the last month of 2021, up by 1.9 percent from the P3.49 trillion lodged in November last year. The increase was attributed to the impact of peso depreciation against the greenback amounting to P40.87 billion and the net availment of external obligations amounting to P33.83 billion.

“These more than offset the effects of adjustments in other foreign currencies amounting to P6.89 billion,” the Treasury said.

External debt also grew by 14.8 percent from P3.1 trillion in December 2020.

Meanwhile, total guaranteed obligations amounted to P423.92 billion, up by 1.5 percent from P417.85 billion but lower by 7.5 percent from P458.35 billion  in December 2020.

Guaranteed debt was higher month-on-month, with the Treasury pinning this on the net availment of domestic guarantees amounting to P5.99 billion and on the effects of peso depreciation against the US dollar amounting to P2.68 billion.

Government officials have signaled that the amount of money it owes would further balloon to P13.42 trillion by the end of this year. The government also earlier projected the debt-to-GDP ratio—a  comparison of what the country owes with what it produces—to peak at 60.8 percent this year.

Such fiscal scenario prompted Finance Secretary Carlos G. Dominguez III to announce in November last year that he’s reviewing the viability of pursuing a “fiscal consolidation plan” to bring down the government’s debt and budget deficit levels.


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